what to know before putting the hook

By Francisco Rinaldi / [email protected]

Juan went to get his personal credit from the bank. Enthusiastic about an interest rate not much above the inflation published in the newspapers, he makes up his mind and asks for a few more pesos than he originally planned “just in case.”

However, when you receive the first installment, you find that it may be around 1,000 pesos more expensive in relation to what you planned to pay. What is worse (Juan does not know) is that the cost that he will actually pay for his credit is not only above the interest he thought he would face, but it is also much higher with respect to what is expected to increase. prices.

What happened? Juan’s first mistake was to look at the interest rate, in some cases, just under half of what actually ends up being paid for a loan.

“Many people focus only on the rate, that is, on the cost of money. However, it is important to also consider that there are commissions, expenses, taxes and other related products. For this reason, it is always recommended to check the Total Financial Cost (CFT), which, unlike the Annual Nominal Rate (TNA), incorporates the other costs. Also, it is a good exercise to compare it with other financial institutions. On the other hand, it is preferable to consider fixed rates to avoid the lack of predictability in the growth of the monthly installment, as is the case of the variable rate, ”they recommend from Banco Provincia.

And the differences, when one “digs” through the different banks’ websites, makes the hair stand on end: a top-of-the-line private equity entity offered a personal loan for a maximum term of 60 months, at a TNA of 59 %, which, taking all its costs, grew to 100.07% of CFT.

Another, also foreign, offered a TNA of 78% for a staff at 72 months (maximum term), but, in reality, the potential applicant would have to pay 112.47%, which stretched to 147.87% if it was considered the payment of VAT on the interest of the credit.

Juan’s other mistake was asking for those extra pesos. “We advise not asking for more than the money that is needed, so as not to face unnecessary interest payments. As in the case of the term, when the amount is calculated it is necessary to evaluate the fee / income ratio to see its availability to pay. Even if the person believes that they will need more money in the future, they can then renew the previous loan or take out an additional loan, depending on the convenience ”, they explain from Bapro.

In addition, it did not simulate the loan or ask the loan officer for the progress chart, a worksheet that shows, in each column, the amounts to be paid as a pure installment (principal plus interest), plus additional expenses for insurance, taxes, commissions and other extras, which, as Juan now knows, are added to the pure fee.

“One of the most important exercises before advancing in the contracting of a loan, in addition to learning about the conditions, is to take advantage of virtual simulators. Most of the entities offer in their pages the possibility of simulating a loan and thus facilitates the comparison of different amounts and terms ”.

What if I regret it?

Aware of all this, Juan regrets and decides to cancel his loan, hoping to get better information to make a decision. Can you do it at no cost? The answer is yes, but under certain conditions.

“If the user of financial services rushed to make the decision and feels regretful, they have the right to revoke the acceptance of the product within a period of 10 business days from the date of receipt of the contract or the effective availability of the same, what happens last ”.

“This option has no cost or responsibility as long as you have not made use of it. If once the loan is taken, the person decides to cancel the debt, there is the possibility of doing so at no cost: there are no commissions for paying off the debt if at least a quarter of the original term of the financing has passed or 180 calendar days from its granting, of both the greater ”, they explain from the Buenosairean financial organization.

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